GUEST BLOG: Turbulent Times

We asked Oliver McDonald, Associate Director of Sentry Wealth to put some words together regarding the investment market and how COVID-19 has affected the economy.

“In recent weeks, stocks markets have once again hit the headlines amid the COVID-19 outbreak. The economic impact expected from the outbreak has spooked many investors and sparked a mass sell-off in shares in almost every corner of the globe. On March 12th, the Dow Jones suffered its worst points loss ever whilst the FTSE 100 fell to an eight-year low. The effects of COVID-19 on our lives and the worldwide economy are still largely unknown.

Economic packages from governments around the world have been implemented including slashing interest rates, quantitative easing and loans/grants made available to assist people and businesses in these difficult times.

Recent volatility in markets will have affected many investors assets and, often the second largest asset for many – your pension pots. Looking beyond all of this is difficult, but as unsettling as it is to be invested during times like these, if history has taught us anything, it is that these periods of volatility do not last forever, and the markets will recover.

As financial planners, our role is often to guide clients through these difficult times and explain how everything works. The FTSE 100 was down 43% at one point from its mid-February highs and this occurred in just a matter of weeks. However, with the correct financial advice, you will have seen losses nowhere near these levels due to proper diversification. A well-positioned portfolio should invest globally, in various sectors and asset classes. Stocks and shares are one asset class available on the market and others include lower-risk assets such as bonds and cash products. Additionally, absolute-return funds, property and infrastructure can provide further diversification and spreading of risk.

This is a time for considered thoughts and actions and to remind ourselves of the reasons that we made our longer-term investments. A well-thought-out and carefully implemented investment portfolio can help achieve your long-term goals. Investment companies used by IEP Financial have stood the test of time, invest in portfolios to match individuals attitude to risk with competitive charges. They also need to show good performance against benchmarks when measured against their peers.

Long-term investing can be incredibly rewarding, especially through the power of compounding. However, it requires planning, resilience and patience. As Warren Buffet once said “the stock market is a device for transferring money from the impatient to the patient’.

Now, onto the exciting part…

At some point, an investment buying opportunity will present itself. Buying at a low price and selling at a high price remains one of the basic investment principles. Our preferred route in times of volatility has always been to phase investment, investing amounts over a longer period to reduce risk. This is called pound cost averaging and is a very useful way of reducing risk for new investments. If you are considering a new investment or looking to review your pensions, you should seek independent financial advice.”

If you would like to discuss your investments or pensions please do feel free to get in touch and Oliver will be delighted to help.

Call: 03442 643 575
Email: oliver@sentrywealth.co.uk